Chinese crane sector to enjoy "golden decade"

The next ten years promise a "golden age" for the crane business in China, according to leading Chinese crane manufacturer XCMG.

Speaking at the International Crane Summit in Shanghai, China, Mr Sun Jian Zhong, vice president of XCMG, said China was on a "fast track" of urbanisation, with the proportion of the population living in urban areas having increased from under 35% 10 years ago to almost 48% now and likely to reach 53% by 2015 and as much as 60% by 2020.

Investment in infrastructure and other facilities in support of this major population shift will lead to continued demand for construction work, said Mr Sun; "China's urbanisation will witness a golden period of at least ten more years in future. Therefore, it can be predicted that China's crane industry will also embrace a golden period of at least ten more years."

China's domestic crane manufacturing capacity has expanded enormously in the past decade as demand for cranes has increased, said Xiong Yanming, vice-president of Zoomlion, also speaking at the Summit. Domestic manufacturers are now building cranes with capacities of 1000 t and more, compared to the 200 t upper limit of a decade ago.

However, Mr Yanming cautioned Chinese manufacturer not to develop these large cranes too quickly. "Many companies are blindly pursuing tonnage, but don't spend time developing their core technology", he said.

He argued that it was important for domestic manufacturers to develop the internal technical now-how, and the training capacities to support these massive cranes. "We are still imitating overseas manufacturers...we should lay good foundations before developing large cranes."

Crane rental is also a growing trend in China, but its development is being hampered by lack of knowledge of rental, the continuing culture for Chinese contractors to buy rather than rent, and unsophisticated rental management practices.

Mr Li Hua Bin, general manager of Shanghai Jinheyuan Equipment Rental, one of the largest crane rental companies in China, told the Summit that crane rental was still a very immature sector in China, and was being impacted by low prices and a lack of acceptance of rental, even in government; "When we invoice, it is categorised as ‘entertainment'. The government doesn't have a clear understanding of crane rental services."

Customers also need education about rental; "Especially state run companies. They just want to buy - it's the culture of the Chinese. It is not easy to change the mentality."

Pricing discipline is also an issue, said Mr Li; "Pricing is in chaos: some companies are not thinking about whether they are making money or a profit, and are only interested in getting equipment out on rent to pay back the interest on loans."